Donald Trump DID know about a $130,000 payment made to porn star Stormy Daniels and reimbursed his lawyer Michael Cohen, Rudy Giuliani sensationally admitted last night.

The slip-up came during a live TV interview in which Giuliani, a long-time friend of Trump's who has recently joined his legal team, was trying to explain why the payment was not a problem for the President.

In an interview with Trump ally Sean Hannity on Fox News, Giuliani maintained that the $130,000 was "perfectly legal".

But in unguarded moment, the former New York mayor also said the money had been "funneled... through a law firm, and the president repaid it."

Those words directly contradict months of statements from both the White House and President Trump himself.

The saga began when it emerged Trump's longtime lawyer and friend Michael Cohen had paid 39-year-old Stormy Daniels, real name Stephanie Clifford, to keep quiet about an alleged affair shortly before the 2016 election.

Trump has denied knowing about the payment
Adult film actress Stormy Daniels
Stormy Daniels with her lawyer Michael Avenatti

Stormy was 27-years-old at the time and Trump was 60.

When asked if he knew about the Cohen payment, Trump told reporters: "No, no. You’ll have to ask Michael Cohen.

"Michael is my attorney. You’ll have to ask Michael."

Trump's press secretary Sarah Sanders has also repeatedly denied the affair and that the President knew of the 'hush money'.

Former New York City Mayor Rudy Giuliani

Cohen had admitted he paid the money, but maintains it was out of his own pocket in a defensive move to protect his client.

Reacting to the Giuliani interview, Daniels' lawyer Michael Avenatti, told CNBC: "This is exactly what we predicted would ultimately be shown.

"Every American, regardless of their politics, should be outraged."

Mr Avenatti said he was certain the admission amounts to a violation of campaign finance laws.

During the Fox interview, Giuliani said: "That money was not campaign money.

"Sorry, I'm giving you a fact now that you don't know. It's not campaign money.

"No campaign finance violation.

The White House said Trump denies having an affair with Stormy Daniels.

It comes as the President's lawyer Michael Cohen faces a criminal investigation.

His offices and home were raided by the FBI and a number of documents seized relating to the case.